U.S. Cryptocurrency Trading Firm Robinhood Files for IPO, but Faces $70 Million in Fines

Robinhood, a U.S. stock and cryptocurrency trading app company, has filed for an initial public offering with the U.S. Securities and Exchange Commission, proposing to raise up to $100 million.

U.S. Cryptocurrency Trading Firm Robinhood Files for IPO, but Faces  Million in Fines

Robinhood, a U.S. stock and cryptocurrency trading app company, has filed with the SEC for an initial public offering to raise up to $100 million.

In its registration statement on Form S-1 filed, Robinhood stated its intention to move forward with an initial public offering of its Class A common stock. If approved, Robinhood said it plans to list on the Nasdaq and trade under the symbol “HOOD.

The offering is being led by Goldman Sachs, JPMorgan Chase, Barclays, Citigroup, Wells Fargo and Mizuho, and Robinhood has also said it will reserve 20 to 35 percent of its shares for its subscribers.

Robinhood is a U.S. equity-focused retail brokerage firm that currently supports services including.

1、Trading in US-listed stocks and ETFs and related options and ADRs.

2、Cryptocurrency trading.

3、Investments.

  1. IPO trading channels, cash management and subscription services.

Just a day before the company’s IPO announcement, that is, on Wednesday, FINRA ordered Robinhood to pay a $57 million fine to the regulator and provide approximately $12.6 million in restitution to certain customers.

The reason for this is that the FINRA found that Robinhood should pay $7 million after problems with its systems caused a user to have a negative balance of more than $730,000 in his account, which led him to commit suicide.

Meanwhile FINRA believes Robinhood is required to pay more than $5 million to those users who were affected by the disruption of the Robinhood app between 2018 and 2020, with many users allegedly unable to execute trades on the platform during periods of dramatic market volatility and indirectly losing up to tens of thousands of dollars.

The fine was the highest ever imposed by FINRA in its history.

Robinhood, which is a party to the case, neither admitted nor denied the allegations, but finally agreed to accept the FINRA’s findings.

So far, Robinhood reported in its filings that it has reached an agreement in principle with the regulator to pay a $57 million fine, but only $4.5 million in compensation to affected users.

In addition, Robinhood is facing multiple lawsuits from regulators, U.S. state authorities and individuals, and is expected to pay $15 million to the New York State Department of Financial Services for “anti-money laundering and cybersecurity related issues.

While Robinhood is facing significant fines at this time, Robinhood’s monthly active user base is now up 172% year-over-year from 4.3 million at the end of 2019 to 11.7 million at the end of 2020, and funded trading accounts are up 151% year-over-year, according to documents released by Robinhood in the first quarter of this year.

In 2019 Robinhood had revenue of $278 million and net income of -$107 million, but by 2020 Robinhood had revenue of $959 million and net income of $7.45 million.

Not only that, but Robinhood reported in its SEC filing that it had $11.6 billion in crypto assets under custody as of the end of the first quarter of this year, with 17% of its total revenue in the first quarter of 2021 coming from cryptocurrency trading.

Meanwhile, more than 9.5 million users traded approximately $88 billion in cryptocurrencies in three months alone, with dogcoin playing a significant role in cryptocurrency trading.

Robinhood reported that 34% of total cryptocurrency revenue in the first quarter of 2021 came from dogcoin, which could have some impact on its business if dogcoin falls.

Unfortunately Robinhood is not the first to take the plunge, the first cryptocurrency exchange to go public was Coinbase, not the first, but deep enough in this period of cryptocurrency integration into the traditional financial industry.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/u-s-cryptocurrency-trading-firm-robinhood-files-for-ipo-but-faces-70-million-in-fines/
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